What happens if you lose your job before closing?
Every day, would-be homeowners follow the usual steps to obtain a mortgage from a traditional lender. In many cases, these steps involve operating under an assumption that there will be no change in their household income or debt levels between the time they apply for a mortgage and when the real estate deal closes. This assumption leads some buyers to waive financing conditions on their purchase offers in fast-moving housing markets, which can help prevent missing out if there are multiple bids for a seller to consider.
But what happens if your financial circumstances change in the interim? As Georgia and Mark (not their real names) learned, even when the change is through no fault of your own, it can place your dreams of homeownership in jeopardy.
Georgia & Mark’s story: Buying a home after a job change
Georgia and Mark were both full-time, salaried employees with good credit scores when they started the process of purchasing a home in the Ottawa region. Once they had saved up a 20% down payment, they found the house of their dreams and were overjoyed when their offer of purchase was accepted. With the help of their broker, they had secured mortgage financing with their bank, and believed everything would go smoothly, all the way up to moving into their new home.
Unfortunately, shortly after their mortgage application was approved, but before closing on their new home, Mark’s workplace underwent a restructuring, and he was laid off as a result. Georgia was still employed, but her income alone was not enough to cover all of their expenses. As their savings were tied up in the deposit on their new house, they were temporarily forced to live off their credit cards for daily expenses. As a result, their credit scores fell below the minimum qualifications for their bank financing when the deal was due to close.
Mark was diligent in his employment search and quickly found another job. In fact, he already had an employment offer letter on the closing date. However, their debt load was now higher than what their bank initially approved, so the couple no longer qualified for their mortgage. Unable to close on the home purchase without mortgage financing, Georgia and Mark were faced with the possibility of losing their deposit—and their dream home.
Their broker, determined to help them get through this challenging life event, knew there had to be another way to Georgia and Mark to purchase their new home. Working with a Home Trust Business Development Manager, it was determined that they could still be eligible for a mortgage with Home Trust, despite their increased debt load. After reviewing their options with their broker, Georgia and Mark selected the Home Trust Classic mortgage, which provided them with the opportunity to have a mortgage of up to 80% of the home’s value.
The persistence to find new financing at closing paid off for Georgia and Mark. Three years later, Mark is still happy in his new job, and the family is enjoying their Ottawa dream home with their young daughter, Carla.
Your Story Matters
An unexpected life event, like a sudden change in employment, can happen to anyone at any time. The key to getting back on track, or to staying on track, during these periods of uncertainty is working with mortgage professionals who are willing to listen to your whole story.
If your financial condition has changed between the time when you made an offer on a house and when the deal closes, ask your broker to turn to their Home Trust Business Development Manager for help. Together, we can help you find a mortgage solution that takes your whole financial story into account. Visit our website to get more information about the mortgage options available to you from Home Trust.
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